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Four Fundamental Building Blocks of Strategy Execution





I once heard in a camping site from our scout’s instructor that whenever a fire brigade comes, the flame becomes even fiercer, and you might begin to wonder what is that they are squirting, and whether they are not by any chance pouring oil into the fire. This is the problem most corporates globally and even in Kenya seems to be currently facing. In this column, we shall reflect on the four fundamental building blocks of strategy execution.

 

Corporate is Kenya is awash with corporate failure, Uchumi, Kenya Airways, National Bank, both Private and Public sector is touched in equal measures. All these companies do have, probably, very sound strategies but still get into trouble. Of course the issue of corporate governance comes in but a weak spot in execution be very critical as well. Remember all these companies have a great strategy, brilliant products but still fail.   In that regard, we can infer that a brilliant strategy, blockbuster product, or breakthrough technology can put you on the competitive map. But only solid execution can keep you there, you have to be able to deliver on your Strategic intent. Unfortunately, the majority of companies aren’t very good at it, by their own admission. So how comes these major companies fail to execute well? I believe there is a wrong approach to what is called execution. As the Jubilee government was just about to release its scorecard, serious changes in the structure of the presidency were made. One explanation given was that due to poor delivery, the government was restructuring in order to ensure that it delivers its campaign promise before its term comes to an end. The same approach seems to be taking place even in the private sector. When Uchumi failed, what was done was to replace the CEO and reconstitute the board. This has been Uchumi’s natural response to failure for decades.  Recently when national bank got into trouble, the next logical response was to reconstitute and restructure the management.
What is strategy execution?

 

One key understanding is that
Execution is the result of thousands of decisions made every day by employees acting according to the information they have and their own self-interest. From my experience in Strategy execution with companies, the fundamental building blocks to strategy execution are; clarifying decision rights (Decision Rights), designing information flows (information), aligning motivators (Motivators) and Making changes to structure (Structure). Most organizations rush to structural changes- Restructuring, reconstituting for instance Uchumi, Kenya airways, among others. Structural change can improve execution. But it’s the capstone, not the cornerstone, of any organizational strategic transformation. Actions having to do with decision rights and information are about twice as effective—as improvements made to the other two building blocks. On research done closely with the companies that were strong on execution, 71% of individuals stated that everyone has a good idea of the decisions and actions for which he or she is responsible. That figure drops to 32% in organizations weak on execution. On average, 77% of individuals in strong-execution organizations agree with statement that important information about the competitive environment gets to headquarters quickly whereas only 45% of those in weak-execution organizations do. With regards to decision clarity, 71% of respondents in weak-execution companies thought that decisions were being second-guessed, whereas only 45% of those from strong-execution organizations felt that way. Lastly, 61% of individuals in strong-execution organizations agree that field and line employees have the information they need to understand the bottom-line impact of their decisions. This figure plummets to 28% in weak-execution organizations.

In that regard, in order to succeed in your execution, structure comes last but before that ensure you put in a place a culture where the four building blocks that managers can use to improve strategy execution are in place. Remember these four building blocks—decision rights, information, structure, and motivators—are inextricably linked. This is because unclear decision rights not only paralyze decision-making but also impede information flow, divorce performance from rewards, and prompt work-around that subvert formal reporting lines. Blocking information results in poor decisions, limited career development, and a reinforcement of structural silos.  The strategic implications of this is that instead of spending too much time and resources in structuring a non-performing firm, first put in place the cornerstone of strategy execution, that is, decision rights and information flow. This should be followed by the capstone of Strategy execution, structure, and motivators. Structure helps clear the lines of decisions and action points and whom information flows to. Motivator now aligns the information flow, decision-making and the corporate Structure with the self-interest of the employees since employees always act in self-interest. In short, align organizational goals and the individual goals, which ends in delivering organizational strategic objectives hence successful strategy Execution.

Written by Dr. Fredrick Onyango Ogola ,
Senior Lecturer- Strathmore University



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